South Carolina agency head received $97K more in unauthorized raises than previously reported

The former head of South Carolina’s higher education oversight agency received nearly $100,000 more in unauthorized, supplemental pay than was previously reported, according to a newly released inspection.

Former S.C. Commission on Higher Education Interim Director Jeff Schilz received $96,655 in addition to his salary from April 2017 to July 2018. The money was being paid in supplements from the commission’s foundation, according to a report from the Office of Inspector General. After the foundation ran low on money, former commission chair Tim Hofferth approved a $91,500 annual raise for Schilz in August 2018, the report said.

The foundation board approved an annual salary supplement of $73,720, effective April 8, 2017, which over 15 months totaled more than $96,000, the inspector general report said. It also increased the combined annual salary to $240,000. “However, the salary supplement was not put before the CHE Board for approval, nor was the salary supplement disclosed, as required by statute and Proviso 93.14.”

Neither Schilz’s supplemental pay from the foundation, nor the $91,500 annual raise meant to replace it, was properly approved, the report said. Both Schilz and Hofferth resigned in the wake of the pay hike, which ignited the ire of lawmakers, including Sen. President Pro Tempore Hugh Leatherman, R-Florence, widely considered one of the most powerful lawmakers in Columbia.

Jeff Schilz(Photo: Courtesy of Jeff Schilz)

Schilz, in a statement released Thursday, said he was hired by the commission to do a specific job. “Any mistakes made during the hiring process were made by others, but in no way should be used by some to distract from the fact that the state’s higher education system is broken and it’s going to take hard work to fix it for the families, students and taxpayers of South Carolina,” Schilz said.

Mike LeFever, who took over as the commission’s interim-director after Schilz resigned, said the commission does not “dispute the facts” of the report.

“We’re going to do better,” he said.

Schilz’s initial salary supplement was funded by the S.C. Higher Education Foundation Inc., a nonprofit that also paid for executive retreats, refreshments at the commission’s town halls and catered Christmas parties, the report shows.

Hofferth, the former CHE chair, said the foundation’s supplemental pay was properly approved in an executive session with other board members and an attorney present. Talks of using the foundation money to help pay a commissioner director started before Schilz was hired. The supplement was meant to help stabilize a position that had seen a high rate of turnover, Hofferth said.

“We talked about the foundation and the use of the foundation to help secure somebody for that position,” Hofferth said. “We had that conversation way before Jeff ever came around.”

“The final number was never approved nor did it need to,” Hofferth said, because the money was coming from an outside organization.

The inspector general report, however, makes clear the salary supplement was improperly approved.

“This salary supplement did not comply with Proviso 93.14, which required the prior approval of the CHE Board and the reporting of the salary supplement source to the (Department of Administration) by August 31 for the preceding fiscal year,” the report said.

State Sen. Hugh Leatherman, who called the $91,500 pay raise illegal, said the inspector general’s report shows “extremely poor judgment was used in this situation.”

“I assume it was poor judgment and nothing else,” Leatherman said. “But it makes you wonder why the chairman of that commission would do what he did.”

The report said Schilz was the first and only director to receive a salary supplement from the foundation and that Schilz’s salary supplement was the foundation’s largest expense. LeFever, who is being paid $176,256, said he would “certainly not” be taking a salary supplement from the foundation, which currently has around $30,000, LeFever said.

LeFever said he will be conducting a “complete study” of the foundation, after CHE board members told him they were in the dark about the organization, how it is funded and what it does.

LeFever also responded to a rumor that alleged the commission received money from Charles or David Koch, Republican mega-donors who often use their money and clout to influence higher education. LeFever said the foundation does not receive any money from the Kochs or their companies.